Posted by Brad Crouch on August 08, 2003 at 13:47:18:
> I just want to make sure the originator of the land
> contract cannot call it due when he finds the
> property placed in a trust.
With a land contract, the “originator” would be the seller. He cannot be surprised by the fact that the property is in a trust because HE would be the only one who could have put it there.
If you’re talking about the lender who has the underlying loan (I think that is who you mean), then the answer would be a little different.
My question to you would be, how would the lender find out about the transfer into a trust? As long as the payments were kept current, the lender would have no reason to check the public records to see that the property was now in a land trust.
Even if they did, this would appear as an “estate planning” move where the beneficiary of the trust would normally still be the borrower.
The Garn St. Germain Act (Federal Depositary Institutions Act, 1982 - 12 U.S.C. 1701-j) specifically exempts this type of title transfer from the loan being called for this reason (use of a land trust where the borrower remains a beneficiary and which does not relate to a transfer of occupancy).
The land trust agreement is not recorded, only the deed transferring the property into a land trust. Subsequent transfers of the beneficial interest is not recorded. Therefore, the identity of the current beneficiary(s) is not public record, and cannot be ascertained with out a court order (expensive).
The main way that a lender can find out about a transfer is when they are notified by an insurance company that there have been changes in the policy.
It has been suggested many times on this board that it might be better to just let the current insurance alone, and not to try to make any changes at all. Then to buy an “additional” policy while keeping the original policy current on the payments.
You might want to look at Bill Bronchick’s article regarding the due on sale clause, which can be found on this site.
Hope this helps,